Inflection Point

by Jeff Tash

You’re standing at center court -- poised and ready -- one point away from GAME…SET…MATCH… My only question to you is, Which side of the net are you on?

It’s official. This is the worst recession in the history of the IT industry. 

Whenever you want to gauge the health of the IT industry, all you have to do is check the size of your Sunday newspaper’s Want Ads. I, personally, have never witnessed anything like the dearth of job listings that I’m seeing today (or, more accurately, not seeing). 

Yet, technologies are bursting at the seam. 

You often hear people say change is constant. They’re wrong. Change is accelerating. And rapidly. 

Let me explain what I think is going on here.

For starters, you need to step back and try to imagine exponential time curves. This is really hard. The problem is that we, human beings, live our lives in linear time -- not exponential time. 

For those perhaps a bit rusty with math, exponential growth curves are “S” shaped. Traveling left to right horizontally along the x-axis is the time dimension. It’s the y-axis, though, that you need to pay special attention to. Along the y-axis, from bottom-to-top, numbers don’t rise arithmetically… 1, 2, 3, 4… they increase geometrically incrementing by orders of magnitude… 1, 10, 100, 1000… 

Every technology follows a standard exponential growth curve. At first, changes occur slowly. If, at this early stage, you plot the exponential growth curve on a graph, it would appear virtually flat. But each new development -- every advance -- spawns it’s own generation of follow-on research. Pretty soon, innovations and discoveries beget multiple generations of more innovations and discoveries. The tree begins to blossom. Finally, the number of new innovations just explodes causing the S-shaped curve to suddenly rise. That’s when changes are happening at a frenzied pace. Eventually, though, the number of new discoveries begins to slow as growth stops due to limitations of the current paradigm. That’s when the top of the S-shaped curve flattens out.

The real elegance of technology is the discontinuous way in which S-shaped curves stack atop S-shaped curves. The top of one S-shaped curve merges into the bottom of the next successor S-shaped curve. These are usually referred to as disruptive innovations or paradigm shifts. 

Consider Moore’s Law. It’s a classic example of exponential growth, tracking as it does integrated circuit (IC) chip technology advances. Of course, ICs were themselves replacements for transistors -- which were replacements for vacuum tubes -- which were replacements for relay switches. Got the picture? And, each of those individual technologies -- chips, transistors, tubes, relays -- has its own S-shaped growth curve. 

Someday, probably sometime during the next decade, Moore’s Law may begin to run out of gas -- and then the top of its S-shaped curve will flatten. Most likely, though, by that time some new technology will have emerged -- perhaps molecular computing. Regardless, computer processing will continue to progress along its own exponential growth curve as S-shaped curves chain together to form one long geometrically linear line representing continuous exponential growth. That’s the miracle of technology.

The dilemma challenging 21st century CIOs is that Moore’s Law is only the tip of the proverbial iceberg. 

While Moore’s Law continues to chug along, halving in price and doubling in performance every 18 months, other technologies, like storewidth and bandwidth, are improving even faster. Storage technology doubles its price performance ratio every 12 months. For fiber optics, the doubling occurs every 6 months. 

Please stop here. Take special notice to what I’m about to say. This is really important.

The number of distinct, different, technologies -- each growing exponentially -- is itself, now growing exponentially. Change is accelerating. How fast? Let’s say you could count all of the unique discoveries and innovations that happened during the 20th century, so that you end up with one measure -- a tally -- a single number. That same number of innovations and discoveries will be reached in the 21st century by sometime around 2014. Exponential growth is growing exponentially.

Now, stop again. Step back. Look at your own enterprise. 

Success in any business or organization hinges on how well four key variables are managed:

• money
• property
• people
• technology

I imagine that every one of you with a job works for an organization that expends considerable time, money and effort managing its internal financial portfolio. I’d also guess your enterprise manages its assets -- all that physical property such as plant, equipment and materials -- and its human resources. 

But, what about technology? 

How well does your organization manage technology? 

I believe that most organizations today are doing an especially poor job with their technology portfolios. Technology is not managed. Instead, at most enterprises today, technology strategy can pretty well be summed up by two words -- shift happens.

Technology is at an inflection point. Your organization needs to decide. 

• Is technology a cost?, or
• Is technology a value? 

Given that geometric technological growth is itself now growing exponentially, my advice is choose value. I’m bullish on technology. I’m convinced that the best, most effective way for a 21st century company to achieve competitive advantage is by leveraging technology. On the other hand, I’m deeply concerned that most organizations today consider technology a cost -- not a value. 

The IT industry recession will come to an end -- probably sooner rather than later. Get prepared now. You can’t afford not to manage your technology portfolio. My final comment -- when you are ready to get started attending to your technology portfolio, I urge you to adopt a product-centric approach.